Your First Home, and why a housing target runs through the mortgage market.

On 31 July 2026 Taylor Wimpey published its half-year results. Sales had slowed through the spring. Across the half year the company sold 0.75 homes per sales outlet per week. In the four weeks to 26 July it sold 0.55. Higher mortgage rates, it said, had "further stretched affordability, particularly for first time buyers and customers in the South of England". Its results named what it wanted from government, and the first item was "a new equity loan scheme".

On 26 September the government announced one. Your First Home will let first-time buyers put down a deposit of 2.5% on a new-build home, with a 20% equity loan from the state. The Ministry of Housing, Communities and Local Government gave it two jobs. One is to "help tackle the deposit barrier for first-time buyers". The other is in this sentence.

This piece is about the second job. A target for new homes is met at the speed builders can sell them, and Your First Home is aimed at the sale. Following it through means tracing the money from the bank to the builder, and then looking at who kept the gains the last time the state did this.

What was announced.

The release is short. It says the scheme will support 2.5% deposits and 20% government-backed equity loans for first-time buyers in England, buying a new-build home from a developer signed up to the scheme. The loan will have "an initial interest free period". There will be a household income cap and local property price caps. Developers "will be expected to make a contribution when signing up to the scheme to help cover costs".

Everything else is deferred. The release says "further details, including costs and implementation timelines, will be announced by the Chancellor at the Budget next month". The Chancellor has told the Treasury Committee that the Budget will be published with the Office for Budget Responsibility's forecast on 28 October 2026.

So the length of the interest-free period is not known. Neither are the caps, the developer's contribution or the cost. What is known is the structure. A buyer brings 2.5%, the state lends 20%, and a bank lends the remaining 77.5%.

The Home Builders Federation, the industry's trade body, welcomed the scheme the same day. Its chief executive, Neil Jefferson, said "it is important now that the Government moves quickly to implement the scheme".

What the market heard.

The announcement was made on a Saturday. Monday 28 September was the first day of trading after it, and shares across the business of building homes rose.

The pattern follows the machinery this piece describes. The largest rise was not a housebuilder. Ibstock makes bricks, and bricks are bought when homes are started, not when they are sold. Mortgage Advice Bureau, which arranges mortgages, rose 5.1%. The FTSE 100 fell 0.1%.

A share price is the market's estimate of a company's future profits. On Monday the market estimated that the first to gain from a scheme for first-time buyers would be the companies that build, supply and finance their homes. Anthony Codling, an analyst at RBC Capital Markets, was quoted in market reports that day saying "Christmas has come early for the UK housebuilders".

One builder did not follow. Berkeley, which builds mainly in London and the south of England, rose as much as 7.3% during the day and closed 0.2% lower. One day's trading cannot show why.

Not every economist read the day the way the market did. Noble Francis, economics director of the Construction Products Association, wrote the same morning that the scheme "won't have anywhere near the impact" of the original Help to Buy, and "won't be the bonanza for house builders & house builder CEO bonuses that some initially think it is". His reason is that the constraint has changed. In 2013, he wrote, the main problem was "a lack of enabled demand". Today it is cost, and unless the government's own added costs are addressed "the sites still remain unviable".

The rate that sets the pace.

A private housebuilder does not build as fast as it can. It builds as fast as it can sell without cutting its prices.

Two official reviews have examined this. Sir Oliver Letwin's review of build-out, in October 2018, looked at large sites and concluded that "the limits on the rate at which the market will absorb such homogenous products, are the fundamental drivers of the slow rate of build out". The Competition and Markets Authority reached the same place in its market study of February 2024. Builders, it found, "tend to sell them at a rate that is consistent with the local absorption rates", which it defined as "the rate at which houses can be sold without housebuilders needing to reduce their prices" (paragraph 4.108).

The reason builders protect the price is the land. Most land, the CMA found, "is bought under the residual valuation model", in which a builder bids what it can afford given the value of the homes it expects to build (paragraph 4.110). How that model works is covered in our explainer. The point here is that the land price assumed a sales price. Selling below it to move stock faster eats the margin the land deal was built on.

The industry measures the result as sales per outlet per week, and that is the number in Taylor Wimpey's July figures. A fall from 0.75 to 0.55 means fewer homes started on the same sites, whatever the planning permissions allow.

That matters to a national target. The government's commitment is 1.5 million homes in this Parliament. Its own latest estimate follows.

By our arithmetic, reaching 1.5 million by July 2029 would need more than 31,000 homes a month from here. The rate since July 2024 has been about 16,600 a month. Planning reform, including the framework rewritten on 17 August, changes where permission is granted. It does not change how many homes a site can sell in a week. A buyer subsidy does.

Where the mortgage money comes from.

A first-time buyer usually buys with a mortgage. The money that pays the builder is created at that moment by the lender, not taken from anyone's savings. The Bank of England set this out in 2014.

The same article says that "bank lending creates deposits", and that bank deposits make up 97% of the money in circulation. The Bank of England does not print the money that buys a new home. A high street lender creates it when it advances the mortgage.

So the pace of sales on a new estate depends on how much banks will lend, to whom, and at what price. Three settings govern that now.

The first is the cost. The Bank of England held Bank Rate at 3.75% on 17 September, on a vote of 6 to 3, with the three dissenters voting for 4%. Its minutes record that the quoted rate on a two-year fixed mortgage "was around 95 basis points higher than prior to the conflict" behind this year's energy shock. The Bank's figures for July show the effective rate on new mortgages at 4.45%, up from 4.35% in June.

The second is volume. Net approvals for house purchase fell to 56,100 in July, below an average of around 60,800 over the previous six months.

The third is a limit on size. The Bank's Financial Policy Committee restricts loans at 4.5 times income or more to 15% of new mortgages. However low the deposit, the mortgage still has to pass that test.

This is the slot the equity loan fits. A first-time buyer without a large deposit needs a 95% mortgage, the highest band lenders offer and the most expensive. With the state providing 20%, the bank lends 77.5% of the price instead, a lower-risk band with a lower rate. That is where the "hundreds of pounds per month" of savings in the government's release come from, along with the interest-free period. The state's money stands where the buyer's deposit would have been. Once it is there, a bank will create the rest.

What the last scheme did.

The government has tested this mechanism before, at national scale, and the evidence on it is now complete.

Help to Buy ran from April 2013 to May 2023. Its final statistics record 387,195 homes bought with an equity loan, 328,346 of them by first-time buyers. The loans totalled £24.7 billion against £109.2 billion of property.

For the largest builders it became a large part of the business. Barratt's annual report for 2019 shows 36% of its completions sold through Help to Buy, the same share as the year before. Persimmon reported selling 7,682 homes to Help to Buy customers in 2017, out of 16,043 legal completions, and an operating margin of 28.2%. The National Audit Office found in 2019 that five of the six largest developers sold between 36% and 48% of their homes through the scheme in 2018.

The government's final evaluation, carried out by Verian with Alma Economics and Sheffield Hallam University, was published on 15 September 2026, eleven days before Your First Home was announced. It answers the questions a new scheme should face. The effect on supply was real, and modest.

That figure covers the whole ten years, most of them at very low interest rates. The evaluation itself notes that the scheme "launched in a post 2008 financial crisis context of low home building and buying", with Bank Rate at 0.5% when it opened in April 2013. It found "little evidence that the change to Help to Buy 2 (in 2021) or the end of the English scheme (in 2023) had a substantial effect on new housing supply", and suggests the scheme "was less needed" by then because high loan to value mortgages had returned. Help to Buy 2, first-time buyers only with price caps, is the version Your First Home most resembles.

Most of the buyers it helped said they could have bought without it.

Prices rose as well. The evaluation estimates prices about 2% higher along the England and Wales border, where the scheme could be compared with Wales, and larger effects in areas that were already less affordable. There, it says, the scheme "may have driven up prices in these relatively more expensive areas, so that buying a home remained out of reach for many potential FTBs". Academic work by Carozzi, Hilber and Yu, published in 2024, found the same split. In Greater London the scheme raised prices with no detectable effect on construction. Near the Welsh border it raised construction without a noticeable effect on prices.

Builders gained. The evaluation found positive effects on developers' revenues, pre-tax profits and margins.

The case for the scheme should be put fairly. The same evaluation rates it "very high" value for money, with a net present social value of £25.1 billion. Its net cost to the Exchequer, in present value terms, is £3.6 billion: £30.9 billion paid out, less £27.3 billion coming back in repayments and income. Most of the money was a loan, and most of it returns.

The competition regulator drew its own conclusion before the evaluation was finished.

How far the public money goes.

The equity loan is small next to the credit it releases. On the announced terms the state provides 20% of the price and a bank provides 77.5%.

Help to Buy shows the same ratio at national scale. Its £24.7 billion of equity loans stood under £109.2 billion of homes. The other £84.5 billion came from buyers' own deposits and their mortgages. The mortgage part was money created by a bank at the moment each purchase completed.

That money does not disappear once the house is sold. It moves, and the next section follows it.

When the support stops, the flow slows. The evaluation found that closing Help to Buy in England cut first-time buyer mortgage sales by "approximately 10-15% compared to what would have happened with the scheme". The CMA had warned that any demand scheme "will inevitably be temporary".

Where the subsidy goes.

The evaluation measures the scheme's benefit to society as "land value uplift". That is the standard method for appraising housing policy. It is also a description of where the value settles.

Follow the residual valuation through. A builder bidding for land estimates the price it will achieve and the rate at which it will sell. A state scheme that lifts both, and is expected to last, enters those estimates. The builder can then bid more for land. The evaluation's interviews with developers describe this. The larger builders talked about "directing their cash flow into buying more land, opening more sites and building more properties on them", and some "described intense competition for land and land banking in the Help to Buy scheme period". One national developer that built over 10,000 homes through the scheme told the evaluators: "If our business is going to grow, we have to keep replacing our land bank and therefore we need to replace our land bank at a faster rate."

So the money moves through the system in order. The state lends to the buyer. The loan unlocks a bank mortgage, which creates new money. On completion that money is paid to the builder, which sells faster and at its price. Then the builder competes harder for the next site, and part of the money a bank created for a first-time buyer ends up as a payment to a landowner. The buyer keeps the debt.

There is also a reason governments prefer this instrument to a grant, and it sits in the fiscal rules. The Charter for Budget Responsibility, updated in February 2026, sets a supplementary target for public sector net financial liabilities (PSNFL) to fall as a share of the economy by 2029-30. That measure counts the loan as an asset held by the state against the borrowing that funds it. The Office for Budget Responsibility warned in October 2024 about "the incentive that the use of PSNFL as a fiscal target creates for the Government to deliver policy through loans and equity injections". An equity loan scheme makes little impression on that target on the day it is launched. A grant of the same size would count in full.

Every lever pointing at the same borrower.

Your First Home is the latest of several changes that all act on the same thing: how much a first-time buyer can borrow to buy a new home.

The guarantee came first. The government made its Mortgage Guarantee Scheme permanent in July 2025, underwriting part of lenders' 91% to 95% mortgages so that they stay on sale.

Then came the income limit. In July 2025 the Financial Policy Committee recommended that individual lenders be allowed to go above 15% of their lending at 4.5 times income or more, provided the market as a whole stayed within it. On 1 April 2026 the Prudential Regulation Authority and the Financial Conduct Authority proposed removing the 15% limit for individual lenders, with the change expected in the second half of 2026 and interim measures running to 31 December. The regulator's own consultation expects the change "may increase homeownership rates as first-time buyers have accounted for an increasing share of high LTI lending".

Now there is the equity loan, which removes most of the deposit.

Alongside them sits the planning side: the framework rewritten on 17 August, which widens where permission can be granted. Taken together, the state has loosened the rules on where homes may be built, underwritten the riskiest mortgages, relaxed the limit on how much people may borrow against their income, and now offered to fund most of the deposit itself. Each change can be defended on its own. Together they aim at one point in the system, a first-time buyer taking on a larger loan for a new-build home.

Where supply can respond, that borrowing becomes homes. Where it cannot, it becomes price, which is the split the Help to Buy evidence found between the Welsh border and London. Price feeds straight back into the residual valuation, and so into what the next site costs.

What is different this time.

The announcement differs from Help to Buy in four respects, and each one maps onto a finding above.

The deposit is lower. Help to Buy required at least 5%. Your First Home asks for 2.5%. The CMA's principles for demand schemes warned that reducing the deposit "leaves such buyers vulnerable to future mortgage and house price movements, with negative equity more likely". A buyer with 2.5% of their own money in a new-build home, which the evaluation found carried a premium over comparable existing homes, has little room for prices to fall.

There is an income cap. Help to Buy had none. The CMA said any scheme should "target those potential purchasers who would not otherwise be able to purchase a home". An income cap is the government's answer to the 54%. How far it goes depends on the level.

The price caps are local. When Help to Buy was restricted in April 2021, the caps were set by region, at 1.5 times the average first-time buyer price in each. The effect in an expensive district shows in the figures for Cotswold District, where the South West cap was £349,000.

In the first three months of 2021, before the caps, 21 purchases in the district used Help to Buy. Under the capped scheme there were 9, and none after the end of 2021. The median new-build home in the district sold for £565,000 in the year to March 2025, according to the Office for National Statistics. On the new terms, that home would need a mortgage of £437,875. At 4.5 times income, that requires a household income of about £97,000, by our arithmetic. Whether "local" caps and the income cap let such a buyer in at all is a decision for the Budget.

Developers pay to join. The release says builders will contribute when they sign up, to help cover costs. The rate has not been published. It is the only term in the announcement that asks anything of the sellers. Its size will show how the government reads the evaluation.

What the Budget has to answer.

The scheme's effect will be decided by numbers not yet published. These are the ones to read on 28 October.

• The price caps. Whether they are set by district, and at what multiple of local prices.
• The income cap. Whether it excludes the buyers who, on the evaluation's evidence, would have bought anyway.
• The interest-free period. How long it lasts, and what the loan costs after it ends.
• The developer contribution. Whether it is a token fee or a real share of the uplift.
• The cost. How the Office for Budget Responsibility scores it against the fiscal rules.
• The link to supply. Whether anything in the terms ties support to homes that would not otherwise have been built, which is the condition the CMA set.

Taylor Wimpey asked for an equity loan in July. By September there was one. What the Budget sets out will show how much of the support reaches the buyer, and how much ends up with the builder and the landowner.

Sources: Noble Francis, posts on X, 28 September 2026; London Stock Exchange closing prices for 25 and 28 September 2026, via Yahoo Finance; Yahoo Finance UK, "Housebuilders star on buyer support scheme but weak miners limit progress", 28 September 2026 (RBC Capital Markets comment); Taylor Wimpey plc, Half year results 2026, 31 July 2026; Ministry of Housing, Communities and Local Government, "New first-time buyer scheme to be confirmed at Budget", 26 September 2026; HM Treasury, Chancellor's letter to the Treasury Committee on the Budget date, 31 July 2026; Home Builders Federation, "HBF response: Government announces new equity loan scheme", 26 September 2026; Sir Oliver Letwin, Independent Review of Build Out: final report, October 2018; Competition and Markets Authority, Housebuilding market study: final report, 26 February 2024, paragraphs 4.108, 4.110 and 5.238; MHCLG, Housing supply: indicators of new supply, England, April to June 2026, 24 September 2026; Bank of England, "Money creation in the modern economy", Quarterly Bulletin 2014 Q1; Bank of England, Monetary Policy Summary and minutes, September 2026; Bank of England, Bank Rate history; Bank of England, Money and Credit, July 2026, 1 September 2026; Bank of England, Financial Policy Committee record, July 2025; Prudential Regulation Authority and Financial Conduct Authority, CP6/26 High loan to income lending, 1 April 2026; HM Treasury, 2025 Mortgage Guarantee Scheme, 15 July 2025; DLUHC, Help to Buy (equity loan scheme): data to 31 May 2023, 16 November 2023, Table 1; Barratt Developments plc, Annual Report and Accounts 2019; Persimmon plc, Final results 2017; National Audit Office, Help to Buy: Equity Loan scheme, progress review, HC 2216, 13 June 2019; MHCLG, Evaluation of the Help to Buy scheme: evaluation findings report and technical report, 15 and 16 September 2026; F. Carozzi, C. Hilber and X. Yu, "On the economic impacts of mortgage credit expansion policies: evidence from Help to Buy", Journal of Urban Economics, vol. 139, 2024; HM Treasury, Charter for Budget Responsibility, February 2026; Office for National Statistics, Public sector net financial liabilities methodology; Office for Budget Responsibility, Economic and fiscal outlook, October 2024, paragraph 7.19; Office for National Statistics, House price statistics for small areas, year ending March 2025.